Recently a UK business support outfit Approved Index
released research which showed that Uganda was the most entrepreneurial country
in the world, while Japan, Italy, Germany and Finland were among the least.
In a report published on the Virgin Entrepreneur web site
they went on to wonder how Uganda could come top of the heap given our violent
past (sounded like we had been reduced to some apocalyptic wasteland).
This report is not the first to find that Uganda is the most
entrepreneurial country in the world.
In 2003 the Global Entrepreneurial Monitor – sponsored by
the World Bank, published a study that ranked Uganda the most entrepreneurial
country in the world. The next year it found that Uganda was second only to
Chile as the most entrepreneurial country in the world.
"In trying to explain the apparent contradiction of why if Uganda was so loaded with entrepreneurs why wasn’t it growing faster and a more developed country, the researchers explained that there were two type of entrepreneurship – necessity and opportunity...
In the necessity entrepreneurship
people start businesses to meet their daily needs, essentially they are not
unlike subsistence farmers.
While opportunity entrepreneurs start businesses to fill a
gap in the market and a ready to grow the business to its full potential, these
kind of businessmen would be found among the founding fathers of the globe’s
biggest companies.
From the outside the distinction may seem minor but it makes
a world of difference.
Once the aim is to grow a business to satisfy personal needs
once these are satisfied it’s difficult to grow it to become the job creating
and tax paying giants that can have real transformative effects on economies.
It is not to say that necessity entrepreneurs can’t grow
into opportunity entrepreneurs.
So the reason why Uganda has businessmen falling out of its
years and yet not seeing a commiserate improvement in the people’s wellbeing is
because most of our businesses are subsistence businesses.
This is a hangover of our turbulent history when jobs were
in short supply but people had t live so they started a kabusiness.
As the economy has grown and become more formalised, the
urge to start a business has been dampened as salaries have improved and one
can expect that if the economy continues to grow we may see a further dimming
of entrepreneurial ardour.
But that wold be a major loss. All big businesses start as
small businesses. But due to the peculiarities of the market it is hard to
determine at the beginning of the process which start ups will grow to become
big businesses. The natural selection process that operates in the market is
such we need thousands of small businesses to start up, thousands more to
collapse for just one Google or ExxonMobil or Toyota to emerge.
So that companies are starting up around every corner is a
good first start for Uganda. Now the trick is how do you keep these companies
popping out of the woodwork, alive, thriving and growing?
The knee jerk reaction is for people to talk about
financing, but money does not come first. It’s the idea and the execution of
that idea that leads to a need for and access to more money.
Financial support is crucial even critical, but more importantly
is that our businessmen need help thinking about their business. We need to
provide the support to hold their hands through the difficult ups and downs of
business. Mentorship programs where experienced businessmen can look over their
businesses advise them on where they are going right and therefor do more of
and where they are veering off the tracks and do less of.
In more developed economies where the pool of successful
businessmen is large these mentorship programs are quite developed. But in addition
they have government programs which help with advice, cheaper funding and
access to investors, but up to a certain point.
But as my hero Warren Buffett says some things just take
time you cannot impregnate nine women and hope to get a baby after a month.
"We are often impatient because we have seen better in our travels and on TV but the truth is we as a country are at the very rudimentary stages of creating many of these systems and institutions...
We are probably better off than most in that the default
mode for most people seems to be to set up a business for some extra cash now
we need to shift that thinking to setting up businesses to exploit any
opportunity to the full.
It’s a lot easier said than done.
